212 is aiming the second fund and planning to invest in up to 15 startups. 212’s Ali Karabey shared their plans and criteria for the investments
As one of the first VCs in Turkey, 212 saw the potential for entrepreneurial and technical talent in the country. Having founded in 2012, 212 raised $30 million for the first fund and invested in 12 startups. Now the company is after the second fund aiming €50 million to invest in up to 15 startups. Let me note: 212 is sector-agnostic and invest in robust and talented teams developing high-technology software and hardware products. I interviewed Ali Karabey, Managing Director at 212, and here is what he told me.
– 212 is one of the first VCs in Turkey. Can you tell me the story of 212? How was the Turkish startup scene at the time?
In 2012, we established 212 to invest in technology startups in Turkey. There were angel networks but no venture capital in Turkey at the time. My partner, Numan and I saw the missing links in the region and decided to fill the gap in the ecosystem. At the time, we saw the potential for entrepreneurial and technical talent in Turkey to produce companies primed for worldwide success. Over the last eight years, we have proved this with investments such as Insider, iyzico, HotelRunner, and Solvoyo. We will repeat the success stories in our second fund.
-As a VC company, how do you raise your capital? How much did you invest so far?
We established our first fund with our personal network as the first venture capital in the region. In the period of first fund, being transparent and having open communication with our investors, our approach to entrepreneurs in the ecosystem, attending over 400 events both local and global, creating a global brand helped us raise second fund which mostly supported by institutional funds. We have a successful track record that the exit of iyzico returned the first fund, and Insider, Solvoyo and HotelRunner have an exit potential. This also made our first investors join the second fund with bigger amount of investments that we almost doubled the fund size in the second fund as €50m.
In our first fund, we had $30m committed capital and invested in 12 companies. The value of the companies we invested in grew to over $500m including one exit of iyzico to PayU. In the second fund, we aim to raise €50m commitment and invest in up to 15 enterprises over the next four years. As of today, we already deployed €8.5m into seven companies: AppSamurai, Chooch, Martı, Meddy, Mall IQ, OmmaSign and SmartMessage.
-As 212, do you have any specific industries to invest in?
As 212, we are sector agnostic. We invest in robust and talented teams developing high-technology software and hardware products. The majority of our deal flow comes from image recognition, artificial intelligence, machine learning and IoT.
-What are your main criteria when you decide to invest in a startup?
Our investment thesis is simple: ‘test local, go global. Fast’. A good team, the right product-market fit, scalability, and successful go-to-market strategies are key criteria. We aim to scale investments globally to facilitate a significant exit. Generating revenue outside of Turkey or the potential growth beyond Turkey is a must in our selection process.
– As you compare Turkish startups with global competitors, what are the pros and cons of Turkish ones?
We believe Turkey is an excellent hub for entrepreneurs. Turkey proves to be an outstanding
source of affordable talented developers and a substantial market for testing product-market fit. Investment per capita in Turkey is low (<€1) compared to Europe (€55) in 2019, yet Turkish entrepreneurs have the power to deliver competent startups.
As a result, since 2019, two of the top ten venture capital exits in Europe have come from Turkey (iyzico and PEAK).
The Turkish market is volatile, and sector dynamics can change dramatically. This dynamic trains entrepreneur to make decisions, change/adapt the business model, and move faster compared to their global competitors. For example, Turkey had its first unicorn, Peak, in the middle of the COVID-19 pandemic.
-On a global scale, what kind of startups will gain significance, especially in days of COVID-19?
In the COVID-19 era, the demand for digital transformation has increased. The companies that are globally solving the biggest issues in education, health, security, streaming and financial services will be the next winners.
-That’s all I want to know. If you have anything extra, please add.
We are optimistic about the future of Turkey and believe in the potential of the country to generate success stories. We believe even in the dark times, investment and entrepreneurship in the Turkish ecosystem will thrive.
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